Share with Email

sending now...

By Susan BeckPublished: Jun 5, 2014

BP Loses Another Fifth Circuit Case, With $18B at Stake

The bad news for BP just keeps coming from the U.S. Court of Appeals for the Fifth Circuit. On Wednesday, the court held that BP Exploration & Production Inc. can be liable for enormous statutory damages under the Clean Water Act as a co-owner of the Macondo well that polluted the Gulf of Mexico in 2010. The unanimous panel also ruled that codefendant Anadarko Petroleum Corp., which owned a minority interest in the well, is also liable. BP could be assessed as much as $18 billion in fines, and Andarko could be fined $4.6 billion.

The fines will be set by New Orleans U.S. District Judge Carl Barbier, with the amount depending in part on whether he finds the companies were grossly negligent. BP is represented by Richard Godfrey of Kirkland & Ellis, and Anadarko is represented by David Salmons of Bingham McCutcheon. The DOJ’s lead lawyer for this appeal is Steven O’Rourke.

Late last month, in a set of related cases, the Fifth Circuit rejected BP’s request for en banc hearings on the method used to calculate awards for private plaintiffs suing the company over the spill. BP has protested that Barbier has improperly allowed people who weren’t actually harmed by the spill to be compensated. The Fifth Circuit agreed with Barbier that BP agreed to use a compensation formula that didn’t require each claimant to prove its losses were caused by the spill, and it can’t now undo that bargain. (That dispute was covered in a May American Lawyer article.)

The Fifth Circuit’s ruling Wednesday upholds a summary judgment ruling by Barbier that the two defendants were liable under the strict liability standard of the Clean Water Act. BP and Anadarko argued that the CWA penalties should be assessed against Transocean Ltd., the owner of the Deepwater Horizon drilling rig, and not against them, because the oil flowed through Transocean’s rig before it entered the water. The appeals court held that this didn’t matter, and there was “no genuine dispute” about the defendants’ liability under the Clean Water Act. (Transocean, represented by Brad Brian of Munger, Tolles & Olson, settled the CWA charges last year for $1 billion.)

Wyn Hornbuckle, a spokesperson for the DOJ, said the government is pleased with the court’s decision, adding, “We hope the court’s decision will be one more step toward reaching a just conclusion for the American people.”

BP declined to comment. In a statement, Anandarko noted that the court had previously found the company not culpable in causing the spill, and that the company continues to believe that its exposure to CWA penalties will not materially impact its financial position.